Gold rate today at one month high on rate cut buzz in US Fed meeting. Experts see more upside

Gold rate today: Following a crack in the US dollar rate and the US bond yield after a dip in the US inflation from 3.30 percent to 3.0 percent, gold prices worldwide witnessed strong buying interest last week. On a weekly basis, the precious yellow metal logged around a 0.80 percent rise in the international market and touched a one-month high. In the domestic market, the MCX gold rate for the August 2024 expiry ended at 73,285 per 10 gm. In the international market, spot gold price finished at $2,411 per ounce while COMEX gold price ended at $2,416 per troy ounce.

According to commodity market experts, gold price today is on an uptrend as US inflation dipped from 3.30 percent to 3 percent, triggering profit booking in the currency and US bond market. The rest of the job was done by the promising US job date at the weekend, which further pulled down US dollar rates and the US treasury yields. They said the uptrend in gold prices may continue as these promising US data have triggered buzz about the US Fed rate cut in the upcoming US Fed meeting scheduled for September of this year.

Cracks in US dollar rate, US bond market

Speaking on the triggers fueling gold prices today, Sugandha Sachdeva, Founder of SS WealthStreet, said, “Gold prices concluded the week on a positive note for the third consecutive week, rising by approximately 0.30% in the domestic market and surging close to 0.82% in the international market, where it surpassed the crucial $2,400 per ounce barrier. The primary catalyst for this upward trend was the weakening of the US dollar, which enhanced the appeal of gold as an alternative asset.”

"A significant factor influencing gold prices has been the continued deceleration in US inflation for the third consecutive month, increasing bets that the Federal Reserve will gain more confidence to begin its monetary easing cycle. The US Consumer Price Index (CPI) for June indicated a cooling of inflationary pressures, rising by 3 percent compared to the estimated 3.1%. However, towards the end of the week, a report indicated that producer prices in the US rose more than expected in the previous month, adding some complexity to the inflation outlook.," Sugandha added.

Slide in the US inflation print

Pointing towards the US inflation data, Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities, said, “In less than 24 hours, the inflation numbers of two nations came in. The first was the US, which saw a dip in inflation from 3.30 percent to 3.0 percent, while the second was ours, which saw a rise from 4.75 percent to 5.08 percent. US Markets cheered the lower inflation print and celebrated with a new high in equities as ten-year bond yields cracked.”

Rate cut buzz in US Fed meeting

"After a dip in the US inflation print and better-than-expected US job data has fueled buzz for the US Fed rate cut in upcoming US Fed meeting, which is scheduled in September 2024. While speaking in last week's testimonial in the US Senate, the US Fed chief Jerome Powell had hinted that 2 percent of the US inflation was still far away, but this was not the only parameter to end the high-interest regime," said Anuj Gupta, Head of Commodity & Currency at HDFC Securities.

Gold price outlook

Expecting the end of consolidation in the gold prices, Alex Kuptsikevich, Senior Market Analyst at FxPro, said, "A soft US CPI report pushed gold above the $2400 mark. The price only climbed above it for a couple of hours in April and barely spent three days above this level in May. In both cases, these climbs shifted the balance to the sellers, followed by a dip below $2300. These episodes may have created a knee-jerk reflex, as the troy ounce price was down about 1% on Friday due to a relatively elevated risk appetite."

The FxPro expert added, "The gold price is approaching the upper end of the range of the last three months, which could be the end of a consolidation after rallying off the lows of October. There is logic to this idea, as this rally started on policy reversal signals. Recent months have been shrouded in uncertainty due to mixed inflation numbers. And now we are registering a rather high degree of willingness of the Fed officials to start easing soon."

Speaking on the gold price outlook, Sugandha Sachdeva of SS WealthStreet said, “Price outlook suggests that gold is finding key support at ₹72,200 to ₹72,000 per 10 gm zone and as long as the same holds on a closing basis, bias remains positive for coming days. Gold prices witnessed a dip during the week, yet garnered buying interest at the above-mentioned support zone. On the higher side, there is near-term resistance at ₹73,300 per 10 gm mark and once that is cleared, the precious metal can potentially test higher levels of around ₹73,700 to ₹74,200 per 10 gm.”

On triggers that may dominate gold price movement in the near term, Sugandha Sachdeva said, "The focus will now shift to upcoming economic data, including US retail sales, housing starts, and building permits, scheduled for next week. These indicators will provide further insights into the economic health and potential actions by the Federal Reserve, which could impact gold prices."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.